There are several articles describing the most common e-commerce fraud types. One of them is known as friendly fraud, a term generating certain curiosity. How can fraud be considered “friendly”? We call friendly fraud the contestation that takes place not for cunning, but due to confusion from the card holder He can have actually made that purchase and not remember it.
In many cases, the reason is simple: the store corporate name is different from its trade name. He bought something at Rita’s Bakery, but is not aware that it is actually called “ABC Com e Distr Alim Ltda”. He literally does not recognize the purchase in his statement. Another common scenario is the son using his parents’ card for purchasing credit for some online game, which could have taken place with or without their knowledge or consent. When seeing a strange entrance in the invoice, the person thinks his card was cloned and requests its cancellation.
What if it had happened to you
It helps quite a lot if you put yourself in the client’s position. Imagine you are looking at your $ 2,700.00 invoice with hundreds of entries. Some you can immediately identify by the store name. Others you remember by the amount and by the date. But there is an entry there of $ 38.45 that you cannot remember at all.
Many just don’t worry too much and understand they have probably bought something but do not remember it anymore (my case!). Some are much more organized, they check the invoice against the receipts and tax receipts until finding the entry. Others call the bank and ask for the store’s phone so that they can check it out (I have seen it happen). And there is a group who calls the bank saying they do not recognize the sale, and the financial institution is forced to refund the transaction and cancel the card. That is where chargeback comes from.
It is not a fraud
The issue is that it is not a fraud. Yes, a chargeback arrived at the store. If nothing is done, the e-commerce will lose that cash. It gives everyone a headache, but chargeback was not an act of ill faith.
All registration data check, the person had the intention to purchase, researched price and all. There was no fraudulent behavior and the client did not make the purchase thinking in not paying for it.
Detecting such transaction is very difficult for the anti-fraud, and you don’t even want that. There are other cheaper and more efficient ways of avoiding such problems.
1. Corporate x trade name
Have you actually seen how your sales show in the credit card statement? Changing the name it shows is a registration issue and can be solved with the procurer. It is the best way, since it is where the confusion begins.
Some demand that the name showing there is the same as the one registered for your CNPJ, so think about that when registering. It is always possible to change it later, but there are accountant costs.
2. Communication with the client
If for any reason you are not able to change the name on the invoice, or while the process is in progress, you can always warn your client on the entry. A simple “you’ll see an entry for $ 100 on behalf of ABC Com e Distr Alim Ltda” is quite helpful.
This is very common for those using sub procurers, such as PayPal, but it is also valid for store owners who process directly. Those keeping the receipts will be able to link it and remember the purchase.
3. Soft Descriptor
This is a more technical solution, and only recently available in Brazil. In it, you can place a dynamic message of your choice near the store name. It can even be a different message for each order! Sub procurers were quick in adopting it, since it helps to see in the invoice PAYPAL*RITASBAKERY.
There are stores using their trade name, the product purchased and even the Customer Care phone to encourage the client to contact them before asking for a chargeback. The people at 37Signals have a very interesting case, where they put a site for the person to access.
There are two issues, here. It only works with some card operators and only displays a limited amount of characters. But it is better than nothing.
Handling chargebacks is a problem, and it is not friendly at all. Therefore, it is important to work in order to avoid unnecessary claims, which implies in improving not only your anti-fraud system, but also other operation points.
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